Azul (AZUL) 9 May 212021 Q1 Earnings call transcript

Hello, everyone, and welcome to Azul's First Quarter 2021 Results Conference Call. My name is Beatriz, and I'll be your operator for today. [Operator Instructions] I would like to turn the presentation over to Thais Haberli, Investor Relations Manager. Please proceed.

Thank you, Beatriz, and welcome all to Azul's first quarter earnings call. announced slides the available that IR we call of on that website. the and we'll results this audio morning, this our The reference are John Azul's will and David today Neeleman, Presenting Chairman; be and Rodgerson, CEO. Founder Malfitani, Revenue are Chief session. also Shah, Q&A Officer, the CFO; Abhi for Alex our our and here

are the forward-looking objectives over historical discussed matters today the expected are not the Before I'd forward-looking statements to Any I call statements. turn plans, caution Company a are statements. like particularly Company's comments performance constitute based regarding facts, David, that in to of we With and will believes range to you future the risks regarding our detail our These assumptions of that on and CVM which uncertainties discuss non-IFRS and call turn the over call, performance Also, subject not isolation. but David? course in reasonable, measures, be SEC considered to the that, in that are should will discussed filings. David. I are during

Hi, Thais. for can our quarter everybody. you you, Thank for hello, hear me? XXXX you joining first – us Thank

Yes.

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David. hear Go you, we Yeah, ahead.

Thanks, Hi Okay. everybody. for our okay. Thank first Thais. quarter Hi, call. earnings joining for XXXX you – us

to here going airline our continue when in the opportunity forward. strong, and positive in I'd each for energy is of success and start our ago, always, I XX I the know world, members. our years thanking customers. Azul, I and other I saw Thanks our a this like As we they to the have is take Brazil. crew team founded key unique family, created of to culture best our incredible proud extremely of be by how care The sense

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airline know, and sustainable. a really efficient, our more a transformation more transformation back do come. lot get this more more to has there's to you fleet lot I'm excited to and As fleet profitable with making plan, to the the

resilient. results quarter our that is first show Our business

in you I airline a emerging our best to and results. give the more confident stronger on continue turn world. to John the now position over we will time put in the growing With to are ourselves details We have as that,

and Azul you, would Thank also Brazil. their for for gratitude to express I to members crew like David. and our dedication all my for passion

are and higher. efforts even Brazil are supporting We in vaccination fly be to the proud ready so to

first see X.X% grew you to quarter, revenue we billion. top-line on by Slide our in As can X, the BRLX.X

second quarter We This also EBITDA. generated EBITDA. positive BRLXXX million of was the positive of consecutive

peaked was our COVID business in the the of a airlines impacted first only March EBITDA remarkable deliver the of strength and second This throughout to It of one quarter. the quarter. in model. the that are positive considering shows in demand We world able wave is accomplishment the

and the our and well. strength flew on Compared our cost the highlighted, most XX% depreciation I'm more the organization David leaner ASKs the XXXX, flexibility are and times real the Even been faced we of XX% which XXXX, the idea during the to quarter remained on has with the As flat. system, you we FX the capacity making pre-pandemic it's operational by the cost ASKs. efficient real. more over going cost with served would increased This in you reduced improvement our and price our Slide proud year. CASK well our you On unit gives XQ first see, fleet us of can the CASK shows of path business. less quarter-over-quarter side leverage. for Again, in price fewer our right with a we've an network X, Azul made progress in clearly forward. as CASK XX% the can Even as the to Normalizing XX%, post-pandemic. in X%. our in our and increases unit superior have fuel Compared these of the uncertain and impressive fuel, we leverage that increasing year-over-year we operating depreciation fuel last to see drop and

a with revenues this we new to more grow entered. and airline structure, be we than will cost improved a profitable proving again our will able crisis We exit

logistics to business. I very Cargo XX% you our On want XX, business. to quarter, another to increasing talk had that our Azul Slide can a about year-over-year. is year shaping record for Turning Azul good XX, up see logistics Cargo, revenues Slide XXXX be

in shows model revenues working the taken reduction will compared that place when Our incredible to have double this flights last over the total XXXX, that you year. consider year

in Just market domestic Brazil. combination flexible as belly most to means network the together new largest customers helping we're of did and the logistics new we're the market, entire creating we the area fleet that passenger with logistics capturing of The the with business. in demand grow

XX, we're market Slide BRLXXX excited with the logistics well happy Brazil, our we while past been about to year. believe Studying market total more per is performance, future. billion we've in the the over Moving

market largest moving of you idea BRLXX can our consumer through in business. truly billion. service. billion market potential Azul logistics While transform the That goods high-value air and current of from be This is incredible reliable gives of addressable Brazil to road an the logistics size cargo growth could the an fast air. times an XX BRLX as unmatched

slide, in than year. started the billion the next is billion ended We about last Moving want cash and to BRLX.X we I in our more position. crisis to This cash cash when quarter with talk BRLX receivables. the

We have rent the made payments We inflows operating in started our cash expenses. BRLXXX million down quarter. amortized minus deferrals and debt, paying current in

market recovery. in CapEx Azul of for prepare over invested BRLXXX also million upcoming We to the

we liquidity flying strong only As fly the On we've the sense cash demand and prepare make are helps generates into to remained BRLX.X The we us that along, lead XX, Slide when doing said our total billion. industry recovery. fly. at all

We access billion. as an and cash assets also the time, liquidity mention to not at important to BRLXXX include additional our any BRLX.X no cetera. including It's restricted million increases we number spare unencumbered this that this, et have have to does parts, such hangers,

were TudoAzul In cargo strategic business, our included and in loyalty addition, our also program assets, numbers. which these we own not

we burns of the year expect ended cash at historically year quarter is to we first the with and quarter. end levels Azul same The quarter the cash, the this

cash inflows for expected significant improving the progress as to recovery next no expect XX make months have quarter-over-quarter We vaccinations. we repayments with and debt continues

of done Azul crisis a the at the at We over There better from is open to unsecured Moving debt ready demand a our XXX% XX% trading The solid are bond at to almost levels, see The the and to debt below debt prudent the raise Most our can traded footing, time. it's U.S. pre-COVID on are was in pre-COVID above X.XX%. above potential currently and is markets or not X% our in to capital this pre-pandemic it put bond trading ADRs at Slide position before carriers recognize par. to exit par. XX% significant with capture markets Azul Azul our market. trading we've while issued and work are XX, how stock. all price upside levels. additional to an of last you year now

With BRLX our than XXXX. in EBITDA year we're of structure, the billion, higher XXXX cost roughly improvements best forecasting in our

moment the The important at focus that progress. Turning to like Brazil made is the I Slide most news XX, has good vaccines. to would topic significant on

per of million capacity to applied doses to million months. get averaging X availability the vaccine in see We steady have Brazilians a eager are XX day. with pipeline X.X a we over we're million coming and doses the doses and do day vaccinated,

We travel. also Brazilians to want that know

of number of demand point hitting March. the applied month domestic to shows U.S. in XX% coincides We the XX%. the with pent-up In the the United demand total of Brazil, of an are population. the result the at seeing we're doses XX Slide inflection States. in proportional to XX% This currently

experience four there's ahead the reason within point inflection domestic two believe market looking weeks. strong will a to So, next similar to the

have in last We seen already significant bookings the XX days economy the as reopens. increase over

Finally, you turning to of our to want advantages. I competitive XX, remind Slide

to structure that, is I the can quickly. your advantages cost opportunities Cargo our bright I ready coming world, been take will With we be back with world position, improved and liquidity structure, strong Our cost and have Azul vaccinations future network Alex team David, and improved transformation, and life the the greatest the optimistic. recovery. fleet not in accused along but of I how accelerating, questions. are an is with for in The optimistic, being very

Instructions] [Operator first Raymond question Savi James. comes Our from Syth,

and Abhi, about talk the where Hey, demand about you a standpoint thinking just what and was come it little you're you good morning, in? maybe of it – if how wondering on bit and kind as vaccinations today the domestic everybody. saw stands I could

Hey, Savi, Yeah. thanks for the question.

message So, is recovery I here. clearly the in we are think good trend a that

a of wave, bottom weeks. in bookings, March XXnd Xth, April weeks second in terms and The hit we those the three of around

the have We the continuous last over since weeks, in seen two. four last improvement accelerating

restrictions. reduction Looking at the XX in have a had all states XX and capitals,

majority open, well. all cities. All different as XX, example, malls So, a – their open, them vast shopping they've restaurants schools have of hours, open but to have and up they're for started

XX%. Paulo with the in over Sao bookings its accelerating especially a we've increase seen a So, market last couple of reopening – weeks, positive in

we trend. positive So, are in definitely that

last volume. The of momentum a say, very recovery well, as sign. is weeks, – by recovery, would which fare two in recent driven the seen first we've the I good positive was But part

And increases that give they've fare increases, small, So, led They've two supported. this and broadly in Azul been last but we've continue. alone, the fare weeks. they've six work that to all been industry small the design, confidence we by over because is the industry accept could been to going

they to March. than half we're what no-show are were week So, in more that down from addition for example, last seeing, of rates

rates, what last timeframe. think time, very of vaccine-driven, when keeping the certainly day. about on The industry reservations normal demand close no-show applied coming This by positive – as wave before sort well vaccines the factor point reopening to this are I September, good right? based a the very, of we did October, this a percentage they point the think of peaked, there's to four I so X.X So, very were signs second we pace on – think canceled first compared we're number, what side. it's before, with economy vaccine the November year, cities, inflection very did of down And the per

is XX percentage XX another So, days. points

wave now XX% demand so, went in It in had the really even where also were and recovery. down, back up good end corporate pre-second – of corporate Corporate between terms positive think pretty demand. that's signs February. further We recovering. I accelerate we're month year, actually the on of progress going much at and is XX% of So to and we last made to

following positive – vaccines recent demand of the recent terms it's certainly and very terms reopening. a the signs of happening definitely So, and in trends in what's

I the not really is addressable And world? strength today shared cargo is take really it today, that that kind of that cargo is if really you're just That's say the fair you it to is to Thank for around carriers issue would supply John, that grow as been demand? there you. might, it it And And really of encouraging. most by driven is And seeing what a were kind market? interesting. stats

going vast big their a chains more Yeah. supply the at are in they're and shoes, quicker, And so is ground-to-air. is looked clothing, the these electronics tell make backwards of business generated Hey, was Savi, incremental from domestic the what your to what revenue and so customers The able move that seeing, goods quarter first it, that. revenue we we are moving incremental is realizing majority we we we part just this of fourth went and to quarter. that customers

happening to that And – vast But so, increasing itself so, mathematically really XXX. increasing, because is is air market the to the but share market and it's our has what's sum it is logistics growing.

thinking. customers, in about our speeding is shift e-commerce in is is moving our for them. pharma a are they're customers, is making which from our basically a it's so shift great And their up which industrial customers It ground-to-air, which how – their thinking logistic solutions, and business,

think just we a opportunity ahead. so of And lot there

in of reduced for would in we've the growth international. I Brazil. of We're majority domestically in cargo a three the of last XX shift the flying in from because example, customers to lately, our trips is weeks, increase thinking But Now, an two network. to Brussels, say, round coming capacity international on seen vast

these an players. e-commerce arms It's race, Savi, with

billion do market best reducing way Brazil, revenue. pretty And order time delivery, they network remarkable. Not of throughout the in need are southeast they to And it's these companies just BRLXXX what is top-line to in all to and and justify and the Brazil. grow to that's the Azul's the triangle the caps to Brazil. provides approaching in of deliver that need In so that

Yeah.

data point. one add So I'll

serve, cities we access have or We XXX we of delivered right. to days communities, less, them, and around X,XXX two already in

and a to of – there lot So go. improvement

get two large the days. part already we So, of population a to under

you. Thank right. All Interesting.

Milberg, Josh Our next question from Stanley. Morgan comes

everyone. Sorry Hey, about that.

of business. on streamlining about the strides base Congrats the also touch the on wanted that. deferrals. on Guys, just Sorry to issue on big and your results,

reference first down leased end made you saw reported past just you year deferrals lease than what your reported the of up in also period. discuss end at think you paying of amortization you billion – We wanted to to the ask that versus some XXXX. long-term of if of more amortization? I the And that? nominal those that could the total came And on as I aircraft by BRLX had quarter schedule elaborate

on there. understand went to wanted what Just

Josh. Yes, Hey, sure.

our essentially XXXX. and banks And XXXX, stakeholders, in right, So, for if you of asked then XXXX, and repayment to recall, plan to banks paying start starting deferrals. we all our suppliers, was suppliers lessors back lessor, went management the plan, in in

place. So, stays in that essentially

that wave, the the cash if to get we you also With to operations going deferrals, for wave money the It's is ready paying in going That we go down the going slide cash we're of just future because positive. stays second CapEx to and toward back Azul place. to generation that right. that investing flow going recall operations be to then in the , the the right. And Day talked down principle about, paying have recovery, from that's budgeted, mainly had right, fleet be flow smaller, second that is

shortfall took essentially to asked our additional and lessors suppliers back we that back for to we deferral. we So, our and and went

to going from plus, the from year cash other mentioned. that and essentially the we at financial because from to if to see And there, quarter, hundred ended expected there. BRLX the look position that's few deferrals out XXXX statements, to this right. So, schedule us of John generation source, lease our you take the payments negotiate have additional going the We're in operations, liquidity you billion XXXX reals essentially, in of with shortfall into position you to cash million end our probably shift that right. we're a on going what top going right, flow We're annual suppliers

dollar U.S. payments, And, Josh, a exchange right. amount the quarter-over-quarter move rate prudent also given in XX% of wasn't significant make it to

first are that where that the back exchange quarter so the balance. we from moved the you're today. end since is rate already that XX% seeing And impacted that's But of thing another

kind be debt of because naturally, see exchange of rate the that So, balance total reduced you'll move. will just

gross it which big the And right. by here. the FX, balance, varies driver drivers, was Yeah. debt couple Essentially of a

If quarter that's to by FX. look exchange a the liability. you of every at period adjusted That always lease operational rate, the going affect big driver. end That's gets

have dollar that's if going So, hopefully in And deliveries, goes up. which have, goes down down, dollars as didn't QX. aircraft up, go right. And we going then to that John we mentioned, additional

de-lever, fleet, a of you young young fleet couple that XX those balance – And IFRS right. well. that note lease adjusted to going means And a old as have of number affected is also the we higher engines as haven't have yet, capitalized and it's We stay that number an to for a that important lease capitalized right. But should liability, down, go liability, a we right. that a to lower spare means fleet normally obviously,

I can't you So of those Josh, and are not airline liability the know an apples-to-apples. an fleet compare with look and other on think people airline them, you a for young it's out. lease that know old pointing because line good with the at fleet but just that, numbers I

Thank much that for explanation. very you Okay.

question comes next from Citi. Stephen Our Trent,

morning, your by definitely was thanks mention of I you've very question. intrigued Hey, seen travel for good taking that my and everybody, the bounce sequentially. business

seeing two, volumes, the high U.S. the point point it price of Just And like questions side, So, we're going around in? but quick price in very right what seeing? kind wondering your kind then direction. looks low curve, kind booking of color international level kind when about first, I'm you're we two any think transatlantic, domestic close of sort of that, of on what the

your love to thoughts get that? on would Just

Hey, Stephen, here. Abhi,

told Morgan want that because Zoom said them the all that the I last clients somebody was in Jamie that's when not. his So, he great. travel. his Dimon And lose and world telling it's news J.P. he if I was business, visited to because And they saw we did the else canceling calls. best was he months in people addition, mean,

market, the travel our demand, less lead So, is corporate the I Sao We Paulo. on terms base Brazil, think in region the recovery. that's region corporate fragmented, tone much single much dependent more perhaps like travel know which to for especially of We actually going to set start corporate recovery. a in of here

of prior wave. a Dimon shared now time, bit double. So, that is a going that the I again. more example, and we But think think the with second on probably last a that I customer finance And that, to within we're obviously others, actually sentiment this flying a air but side, took for pause, – mentioned coming Jamie of like And that even the than businesses. saw try sectors, one are lot up. the happening our It other it's lot I back we catch know competitors to seeing, shared

going So Azul is actually think recovery. I think lead because positioned. context is I our is of to to lead corporate that Brazil in terms in of going And network

curve, things In happened. – have terms booking of two the it's actually it's

As end it have close up, lot than fares revenue volume. average in is close stairs of more is with the come in, a dependent revenue because better up actually you on in terms

confidence further So helping driving in average get fare we're in in and unit because volume seeing and seeing more which which seeing and here, revenues And well, our from reopening, better winter out. revenues we're for so RASMs is in vaccinated interest, we're as the fares average is more example, as June break closer July confidence of better improving. people close

we're that opened in flights up to terms government back we're happy international, The Portuguese Lisbon. from In Brazil. of and

times with times three or back in the five week, times to we're a six summer. So increasing

but Fort think I improvement, week high, some We're they're restrictions cargo. four a U.S. enter Lauderdale, are say times seeing for some flying both and we're I remain, demand especially Brazilians wouldn't plus the to still the okay, they're to times the three EU. – The given fares but scenario.

is next which still Orlando So is opening the we're waiting borders. be our milestone, for. gating the to key factor that, the of going And

based wants international what is to disciplined. be to and market It's on careful. the to be it's needs. going going our going be rollout So And

take that So it comes. we'll as

Very helpful, that. Appreciate Abhi.

comes from question next Our Linenberg, Deutsche Mike Bank.

Sao more the interested information in on had you it chart Recife regional maybe where I near of are Hey. that Good Recife capacity that? chart, there's is take showed bookings look because morning, great and back at adding particularly really Campinas risk with back that cetera. in differences is so comparing Why everyone. that than, people of I'm and some and you was are term, Or Abhi, Paulo. et Hey, when opportunity And Sao than I curious, you what's out bouncing to far much Paulo? an Recife those seeking flying more in Sao capacity just Paulo? faster driving share? and say, Like out pricing just

just let's seeking Well, a bit, little please. term risk reframe would I Yes. the say looking opportunity.

strong recovering. Our are safety are here. It to great. I'll We're compared some Recife, network. where how But I Sao destinations. Guarulhos, all Because disciplined recovering and connectivity, our the our focus It's on we're AXXXs, AXXX, of connecting to access We're XXX% XX%, local that speaks protocols us regional, XXX in No. national network. our cleanliness strength we're Campinas, It nobody in have Paulo, of we and ATRs, the hubs, speaks giving give and the Recife, to right? that's we we flying demand to numbers AXXXs XXX%. you very speaks out that think has. strong. recovered to of are else connectivity to them this Caravans, destinations. pre-crisis, Embraers, And But fact having

Brazil, more north the talk luxuries. demand. it's these demand their think I to business, out further like The to of don't places of engineering, The bit is from nature got connecting. it's is the got Midwest customers, same to They Sao So it's whether agro of demand They they little the do just get business. out. They the Paulo. Recife, infrastructure. a whether to the have whether whether have consultants, it's Brazil, it's is

to much kind just We of that simply exposed demand. are more

flying we are where where And so are We're is. demand we flying strong. the

so demand a right I connectivity, where of all And destinations have combination and the our that now. network. is we It's it's think the different a combination of

than third in environment And I less Latin the airlines of South we're XX-year of the of care the It certainly and our and We've you world, also very position, an that for network important, well. the it's think to that revenue have cost competitors. in over America more the only that had one you taken in It's strength telling airline the the we Mike, have, remarkable was any if and period. as that will. So just matters. been We've one cost to America. previously it's thus, environment We highlight pretty the they means closely. do managing in revenue only the of positive we're that EBITDA a opportunity

it's so the matters, the of strength moves network upon and recovery build to forward. be And that able the as that we'll that

Mike. And now destinations. one Right we're more XXX data Yes. point, just around

for Our six within us plan calls XXX to be the next months.

going So we're which hubs They're keep Campinas, almost is connected. like Horizonte to the Recife, going Belo to getting network And XXX%. keep XXX%; our over XXX%; stronger.

network. another to have I Yes. the about question, but I want add on John to

as adds And see only I isn't does the going it's spooling complexity much cost, fits fleet. size when how as to markets have I that diversified know, work. the – back up, the airline are are Brazil You all approach in X

whatever, up the XXX, than with with can so the way just all only actually of whether And take I seats an more know, you're – caravan you I who have nine advantage to one that. AXXX a don't

if that I that. that it reinforce. thought comment mean, to something I and did know was that great So you want don't I another in one you to I have you have want maybe question. slide there, that's on

flight but kind of comment lot single-fleet that. it, fleet have ULCCs the Mike, on we're about complex the I access like demand. than want more Anyone changes, can we easy do everywhere mind, all do able type. that's to Caravans Keep in do A a operate of flying a pretty X,XXX It's in world. to way a that. And from to wide-bodies, to it difference. there are okay? why Think makes

world. our as where competition sell E-Jet. flight matters. it tries more our fly a out as a metal up-gauge on and there, XXXneos because need that And over able just in most know crucial ATR. the a sell course that's we Abhi you what? it, a And aircraft we're stage than fuel-efficient can He years. could have sell we and it fleet bring that's Just competition, of right down-gauge And the the have. that's all when it can there. a AXXX. the sell the invested sell we put it as to EXs, year-to-date, it in when the And advantage and why he that an to competitive it or a flight difference can but as market It's We've keep can world game. don't in why you XX complexity, this than to that an more in He it's of at And in you profitable the Caravan. it we're flexibility more in makes He bring

Great. I And the as just – agreement but flyer to or joint JV LATAM. you're frequent But to a fact related how mean, it the I see focus is Or I sort how mechanics just venture, like but call. – with interesting that Any release is as that? really and nuggets I was give intentional I us your anything, second – is don't been I fry referred it codeshare underlying it's fish and to running don't know. And you. more on that the of that of sharing wanted there's some with And it, of time. – revenue? reciprocity, benefiting other bigger up get Thank would constantly that about from structure now a was are there this don't and can seems is to what it maybe, out be you things you for on. this know, to to it really marketing is saw in you my think and then think Okay. the anything

Hey, Mike.

a a each a So be chunk free-flowing other clear, And big actually, of it's And it not piece balance almost connecting XX-XX, The demand, selling happy codeshare. with very but happy. the just which nice is very good. It's venture, right? a demand. joint I is also to actually selling close of very a they're local between airline we've We're actually would the with to we're codeshare. expanded happy we're and results, say, It's and LATAM.

not we fly, sharing revenues, just planning had. what no are pricing, and basically, We or joint anything you there's

think And flowing access a use free that it's of what just of allowing they Brazilian focus whether we're wouldn't do do Azul, a where we out each other or we probably to of and are otherwise, strong have it's that's it's it's where So network and And have to code right? allowing share. basically. us – LATAM out best not, each I to partner Recife, the

So actually win-win. a it's I think

the a good around as think very I it's model world well.

have it are which combined, the order all bigger. the codeshare, factors it's domestic, the of we are – terms In international domestic. is right, volumes a codeshares of other size, to Because above much domestic

yes, it's happy. think So – we're I

keep it I they're intent the to as grow recover happy airlines our think networks. is And growing it. the and with

everyone. Very good. Thanks,

Mike. Thanks

Seaport McKenzie, from question Our next comes Global. Dan

market share addressable billion at are look targeting of kind you $XX you couple at with as Good of Hey. that then Thanks, morning. guys. in in And or the or that is Brazil three billion, what questions. some I A guess, say, clarification from housecleaning market here, in percentage two The BRLXXX point road-to-air, years? to just questions that, future? logistics the is today

material, When Yes. to kind Dan, right? And to yes, per that stuff, look addressable, so BRLXXX down it's construction this clothing, it So BRLXX billion today, BRLXXX we BRLXXX agro, billion so But – we're No, of of to stuff. kind today. right? Yes. includes comes going fish everything, billion. electronics year the all market total that that's at that in. billion

to about is grow grow help market able because the to we've shown which today share, to we've how We've but the be is the market. of able our market that new a logistics I consequence going and been think can we create grown opportunities. than faster air XX% XX% competition, much to

XX logistics our we do Bronco. fly to That's to example, been cost exactly adapted fly years For the that's We and side. it on up because business trip on doing do passenger the with what side and to destination Hero what our cargo on logistics are access low from it's Embraer. we ops passenger we're we and side, the perfect the passenger even don't markets. airplane ago, new to going the That's did

have So market I target share. a don't for

and how idea our gives billion have fish in of is will an BRLXX today, we ocean it our worth goal, can you target capture, that grow. we work. billion we're that a think of much But to BRLX if be billion our I BRLXX can and we result

Understood.

like? Okay. not laid billion next I goal was profitability later you hear of macro does that And did me. look was that the aside, an you that interesting. Yes. potentially there then growth XXXX, Very The to what or set $X for what this question year? out kind guess And gets path goal? year or I EBITDA another if just clarification factors we net back for

I profitability. our had I if the forward. had and look peers we of ahead produced to way beyond. let I'll Alex any the the we that was Dan, have walk our think in leaner a We're But business it the We in as at EBITDA reset organization in through you grow of where first details back idea going a capacity taking why BRLX.XX at move can where second, Think fleet perspective. back just XX an that. The the to one the and the we're look BRLX.XX, perspective, see it's again, currency was you on a we but days more currency from you now. fly that's forward, just a from last XX% ago have for month then path I leverage a with And first and that to as give mean negative take going operating a mean quarter, this ASKs And pre-COVID region. in the on – mind was we clearly we've get the of for a a and seen show quarter these – the we layer we side, we've keep margin, transformation the of – that we leverage about of structure. cost XX% to the there. challenging kind we much you you're cost right fuel us But quarter right? will numbers EBIT how optimistic. in

we few you're end priority And seeing country. second very The had the in the demand recovery in you first quarter, By throughout the the entire people have Brazil vaccinated. vaccinated group United the can almost entire quarter, market. the was Alex BRLX full its that a is developed that step-by-step market to kind to of of a not through let you developing Brazil still reached the in I'll and has billion potential. walk get States, But EBITDA. of

Yes.

right? That's prices. is leverage, operational remarkable of how I normalized you you we think leverage think I fuel in a QX. with our here be, tax burn. fuel the would because CASK did reduce know, as the fuel As reducing as we key to what to and We're show We that's happening going fleet fuel part right? the soon carbon we wanted emissions we you dollar just operational is Obviously, why right? is. Cloud, reducing and continue to what's showed our CASK what don't the like plan, big burn transformation going and can,

flying a hours stayed we hours peak right And much we We've if in rather XX and this And normalized a fuel at past. the about quarter we're XX% flat, down FX them So at right? still have in call flown day had would the our QX look period fuel gone now. CASK keeping what FX constant. CASK and day seven airplane

But we day. that those have day a overhead getting a hours the for now. right we're paying is only XX hours seven So

reduce day is improve, to significantly. we and On expand we a efficiency, to going said hours the we're were able that that, higher the going to cost only exists not we the right? that rebuild demand, demand of today. always to same But go obviously XX hours to We the have before. as So flying seven we're airline and with going from top as structure obviously, CASK demand be

we're going side. the we before, overhead in-sourcing efficient essentially the call think to lot as efficient efficient But at more to maintenance, same more less to right. right. XXXX, center, it's people be at put more it certainly more be than So have our story going on terms side, more we're Azul have Day, to and airport but from maintenance paying events of efficient a if I on want maintenance We're had where we in you the the

guy. to We going are bad assuming be a that is corporate probably

corporate, are there said, like Abhi positive from but sums be As to we conservative.

corporate not partial will back So stronger is come if from it certainly leisure. which was XXX% you back to you before, even domestic operation, we're leisure, than especially offset have assume a that when

have a certainly in had what we revenue beneficial we more And have a and that's competitive and codeshare before. efficient environment, You rational adding to that than airline us have LATAM includes didn't is we more the additional XXXX. that

to are allow those the So EBITDA of blocks than get building higher us to kind that a before.

paying we current higher capacity a XXXX there's operation, I we have that also in lot from that we already because it could think fleet when full mean can the Now of are we to extract revenues for. get

passport? Minister path travel a of here these up? international have on doing to here. If what that what the Very a just is help up vaccine it Travel that the the IATA – I open at what's to Brazilian some government to in squeeze on, the can potential good. these here your government Yes. travel solution opening you idea some back markets if or guess anything one share I international a view passport can last is level, of you Or open of one working about This markets? up is is

see don't vaccinated. that to Brazilians eager so. do vaccinated. So but say to, They're of yellow in of And Brazil Tourism We very used the we're the supported. right? I all has all, America. I be travel announced something problem. want most and as want to shots we Brazilian that a to Minister rest be in here mean is it shouldn't Brazil know fever There's is this Latin to order

And see hopefully, not rather than do we open can orders problem. sooner as that up So that a later.

okay. for the guys. time, Thanks see, I

Dan. Thanks,

Our next question comes from Reach Khalil Lima, Capital.

guys. Thanks taking for Hey, question. my morning. Good

if how in that XXXX. also a it is from picture not bit to just the or XXXX, the trying the you and the clarify can international guys profit on are guys on you follow-up in previous on understand breakdown from understand question, little the changes I'm more for how just to pathway? that bit on recover yield previous side a seeing Just a XQ please? presentation trying And little

Khalil. hi, Yes,

country. the the be work weeks accelerated improved, There's is parts But more have of in couple especially in Paulo last other be to over yields going the So have reopenings consistent, of done. mostly as and to the still Sao process right?

XX% fact, average happen industry right? another the In taking need fare. in the will the keep needs and progress opening probably that as think get XX%, we economy get there, think wants up. there. to terms I And of And keeps vaccines to the I industry

in that the see flown will some data take you when will So time.

soon. now to going it's too XQ be is – So

a XQ, bit little fourth in But place needs you'll is we a with all we quarter. with mostly our of working standard exit yields in on can quarter this fourth XXXX think the XXXX. see and pre-crisis make those do plan yields that on so to we're based the it industry a You'll the overall in that. see And to of the most have year. That's progress that the I

I think it will.

earnings get only I their confidence path for back just think the increases forward and that as the demand come starts back to to the everybody is for potential. to everyone

again, Very data last expansion from International it a depend then seen We side, you the flown happened good very year. And borders. to to that August, September, and yield year progress similar we've And what of that XQ in to that in good is you this than And XQ. recently. very similar So October, to I to had expected the on going saw XQ. well. see then in continue. start will is July, going happen lot progress as

Passport think I help. going is enter can having that the vaccine people or is to vaccine approved going to to countries show help

want France, impacted tourism. I talking and opening so the that who Florida seeing have think and for Americans like borders vaccinated. up You're already for Portugal, think Greece, like Iceland, I Portugal economies strongly. And about Florida, need have their seeing places been with local they places places right? places need Americans, like that been even like places We're Brazilians they like

economies think I very or those some couple of or over test the going So vaccination motivation a up kinds combination of of months. to based on open negative for that's be sort to Brazilians some next the strong

happening come in domestic on the steady see will market data see So flown onwards. mostly depend the that progress market. in XQ that. international I But will you And

you. All right. Thank

Mizusaki, Bradesco Victor Our next BBI. question comes from

morning. here. questions two I Hi. Good have

mean we The I at take this, a market. very very is growth. as And call, attractive mentioned addressable let's first when continue a strong revenue look there say, to we the cargo, see during one, you

So lease IPO my comment second BRLXX of was or financial receivables, to the in plan of this any first a made. the million question of is to about basically order leverage? try to monetize was maybe past due, as And there's reduce maybe audit in but there of business provision amount is, statements, March, says part question aircraft the that which no

this to confirm I'd to maybe to have if start is if like do So you going any execute security and Thank plans the deposits? you.

been done. this Yes. to see of I by are couple going next of on continue FedEx, at look business. mean, We'll cargo story several I Azul years. the have and certainly is We'll It we've bullish over think mean our UPS partners. others options. I And all you business very could the look that we what at forward. approached

this just at to No, When And this go looking time? at cargo P&L, team BRLXX it separate but We've and We're BRLXX show at see at at selling an let of to strategic actively IPO continue they but driving, team our much that enormous So very we'd the as so it. is our we're of going going to looking we're this to as right? at of bankers. you that's we market can. growth. we're we billion, be to Are results value the It's really cargo to something addressable after know foolish that give time, of amount there's try look us. sell an it billion our that it not business talked announcing people to certainly time.

on lessee. lessors. in the I where think, a in And is not negotiations Yes. their going this subleases, the situation, a lessor, through with And world, every airline

payments. lease with the for have from to we're were asked with accounting from the We're kind so continue dotting got deferral deferral of our deposits, from new But shorter still for also And us to place. collateral deferral obviously, able, security us there needed a the confident than secured we we we're that of the understandable actually way a and be the an crossing And it's sub-lessees our and than get We But it. lessors, what able lessors, for. teeth. a it to talked to it's same We're have receivables. agreement, obtained negotiate we is we of can sub-lessees. it's best we anything the concession way those everybody if type also eyes same our to get lessors. is our to that those that so from comfortable, agreement revenue and asset maximize for also get that But about to the the just we in we'll our don't, else. more obtain operating And and them going that

Okay. Thank you.

no today's further ahead, [Operator proceed go his with with Instructions] questions, Ladies statements. Please gentlemen, question-and-answer invite concludes and this session. sir. like to would closing I to John

joining for you Thank us today.

speaking team questions, any be we over will with Thanks, forward you the support look your everybody. months. follow-up available, and If coming appreciate to have you person in our and

Azul's does much today. participation That have conference for a day. you very conclude good for Thank audio and your